| Bitcoin | $29,271 | 7 day: +24% | | Ethereum | $743 | 7 day: +22% | | All crypto | $766B | 7 day: +20% | | Bitcoin dominance | 70.6% | 7 day: +2.2% | Prices as of 4:45 p.m. EST
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Bitcoin has quadrupled in price this year. It has also regained 70% dominance today, after falling as low as 32% in Jan. 2018. - For this special, bonus edition of Inside Cryptocurrency, I have selected three of the many factors that contributed to bitcoin's rally this year. Although no one can know with certainty, these are among the top contributors to one of the largest gains in market capitalization (over $400B) of any single asset in 2020.
FACTOR 1: China's DCEP. - Notwithstanding China's majority jurisdiction over bitcoin's hashpower and node holders — and the Foreign Direct Investment that China attracts with its crypto-friendly laws — China's Digital Currency/Electronic Payment (DCEP) is now the world's largest central bank digital currency (CBDC).
- Launching to more users than any cryptocurrency in history, DCEP's imminent roll-out to China's 1.4B population and its 4M transactions processed to date are evidence of China's unwavering pursuit of non-USD-denominated trade.
- Today, 80% of the world's central bankers are working on their own CBDCs.
- Interest in CBDC has grown at least 5X this year versus 2017, and CBDCs are driving awareness of cryptocurrencies and the merits of bitcoin.
This story continues in part 2 and 3, below... Coindesk 
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 FACTOR 2: Market-neutral, deep, consistent, liquid, and institutional arbitrage spreads in Barry Silbert's Grayscale trusts, especially his Bitcoin Trust (OTCQX:GBTC). Grayscale's assets under management (AUM) have reached $20B, a 10x increase within 12 months. - The Grayscale Bitcoin Trust facilitates $166M in daily transactions.
- "On an unlevered basis, even after paying borrow fees, you’re making north of 40% a year," estimated Praetorian Capital's founder. "This arbitrage spread drives everything else in bitcoin."
- Grayscale also has an assortment of cryptocurrency trusts, such as Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), and others, which are easily convertible into bitcoin, increasing institutional arbitrage activity.
- Many other trusts gained major exchange listings this year, contributing to bitcoin's Pac-Man effect ("coins go in, but do not go out"), such as Bitwise's 10 Crypto Index Fund (OTCQX:BITW).
Harris Kupperman
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FACTOR 3: PayPal (NASDAQ:PYPL) listed cryptocurrencies. - Larger than Bank of America and second only to JPMorgan Chase among U.S. banks, PayPal's 2020 listing of bitcoin has had a profound impact on bitcoin's price.
- PayPal's consistent reminders to its 325M account holders that they "can" purchase cryptocurrencies will provide an ongoing stream of buying for months to come.
PayPal
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 Ledger Nano S Coindesk has published a detailed report about Ledger's latest security breach. - Hackers have accessed Ledger's databases numerous times.
- Ledger sells a popular hardware wallet, the Ledger Nano.
- On July 14, the French company informed its customers about another data breach by an unauthorized third party.
- On Dec. 20, the company again posted another notice, this time about a Raidforum data leak containing customer details from Ledger's e-commerce database.
- The next day, one customer reported that a hacker had added an unknown device to one of his two-factor authentication (2FA) methods after disabling his primary SIM card. The hacker changed his user password at Coinbase, Binance, DropBox, and managed to steal $2,000.
- Ledger's CEO Pascal Gauthier penned a blog post about the data leak.
Coindesk
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Binance.KR ("Binance Korea") is closing today, eight months after launching. Binance admitted problems with "smooth liquidity." It did not discuss a recent police investigation of Bithumb, South Korea's largest cryptocurrency exchange, whose chairman was accused of fraud and illicit overseas funds transfers. - The South Korean arm of the giant cryptocurrency exchange Binance publicly announced its suspension on Dec. 24, citing reasons such as trouble with "smooth" operations.
- "It is difficult to provide smooth transaction liquidity and services to users due to the low transaction volume of the BKRW pair," wrote Binance (translated to English).
- Binance Korea opened in April 2020.
- Concurrently, Binance launched its Korean won stablecoin, Binance KRW (BKRW). (Binance Ltd. acquired BxB, creator of a KRW-backed stablecoin called KRWb, allowing Binance to launch BKRW.)
- Binance KR utilized Binance's liquidity and order matching engine.
Important details omitted by Binance: - According to a new law coming into force in March 2021, the sharing of order books between exchanges will be prohibited.
- The law affects Binance KR rivals such as Bithumb Korea, Huobi Korea, and OKEx Korea that share order books with other branches.
- Also, as noted above, South Korean authorities have been conducting a thorough investigation of Bithumb and other cryptocurrency exchanges since at least September.
- Binance insists that liquidity is its primary reason for leaving.
The Block Crypto
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Reports indicate PayPal (NASDAQ:PYPL) will not acquire BitGo, one of the oldest U.S. cryptocurrency companies. Fortune was the first to break the story. BitGo recently settled charges from the U.S. Treasury over sanctions violations. - BitGo holds over $16B worth of cryptocurrencies in custody for its clients.
- According to Fortune's multiple sources, PayPal canceled plans to acquire the crypto custodian BitGo. The CEO of the crypto custodian, Mike Belshe, said the company is nevertheless in "growth mode."
- Founded in 2013, BitGo offers custodial services for bitcoin and other top cryptocurrencies for institutional clients. The company's CEO, recently announced that BitGo's total AUM reached $16B worth of crypto assets.
- Although there has been no confirmation regarding the acquisition deal falling through, Fortune's report suggests that PayPal is already looking for alternative acquisitions.
THE BLOCK
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 |  | Curated by Associated Press fanboy, eye-strained news terminal watcher, and bitcoin follower since $1, Aaron Wise. Temporarily listening to news squawk boxes in Florida while awaiting the construction of cryptopia. |  | | Editor | Jonathan Harris is a writer for Inside.com. Previously, he wrote for The Huffington Post, TakePart.com, and the YouTube channel What’s Trending. | |
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